India’s Securities and Exchange Board of India has completed the first issuances under its Demat 2.0 pilot, with three companies raising a combined ₹1,025 crore ($107.2 million) through tokenized corporate bonds. The test links blockchain-based bond records with the Reserve Bank of India’s wholesale central bank digital currency, creating a delivery-versus-payment system intended to settle securities and cash simultaneously.
REC Ltd. completed the first issue on Sept. 7, raising ₹500 crore ($52.3 million) from 18 institutional participants, according to SEBI. L&T Ltd. issued another ₹500 crore of bonds to four participants on Sept. 9. IIFL completed a ₹25 crore ($2.6 million) issuance involving one participant on the same day.
The pilot places a familiar corporate-debt instrument inside a different market infrastructure. Rather than recording holdings only through existing depository systems, the bonds are created as native digital tokens on a distributed ledger operated by India’s depositories. The framework keeps the legal and economic terms of the securities intact while changing how they are issued, held and settled.
Wholesale CBDC enables simultaneous settlement
SEBI said Demat 2.0 connects the bond platform with the Reserve Bank of India’s wholesale CBDC through the central bank’s Unified Market Interface. The link would enable atomic settlement, meaning the transfer of the bond and the transfer of payment occur together or do not occur at all.
That structure targets a longstanding operational risk in securities markets: one party may deliver an asset before receiving cash, or send funds before receiving the security. Conventional settlement mechanisms manage that risk through clearing arrangements, payment obligations and defined settlement cycles. A shared ledger tied to wholesale e₹ wallets could reduce the number of steps needed to confirm that both sides of a transaction have met their obligations.
The mechanism could also accelerate access to issuance proceeds. SEBI said issuers may receive funds on the same day as bidding, compared with the two to three days generally required under the current corporate-bond issuance process. For borrowers raising large sums, earlier access to proceeds could improve cash planning, particularly where funds are needed for refinancing or project expenditure.
Bondholders would receive interest and principal payments in e₹ directly to their CBDC wallets on scheduled due dates, SEBI said. Authorized institutions would be able to view bondholder information through the shared ledger, giving depositories and regulated market entities a unified record of ownership.
Terms of the bonds remain unchanged
The pilot does not create a separate category of corporate bond or alter the issuer’s contractual obligations, SEBI said. Each tokenized issue retains the same International Securities Identification Number, or ISIN, as a conventional dematerialized bond.
Coupon payments, maturity dates, covenants, credit ratings and holder rights also remain the same. In practical terms, the token represents the existing security in a new record-keeping and settlement environment rather than creating a new crypto asset with different claims on the issuer.
That distinction may help limit legal and operational friction during early testing. Corporate bond participants already understand the underlying instrument, while issuers continue to operate under established disclosure, rating and repayment requirements. The experiment is focused on the market plumbing around the bond rather than a rewrite of corporate-debt rules.
REC’s ₹500 crore issue drew the largest number of participants among the first three deals, with 18 buyers. L&T’s similarly sized transaction involved four participants, while IIFL’s ₹25 crore issue involved one. The differing participation levels offer little basis for judging demand at this stage, since the pilot begins with a controlled institutional group and the individual offerings may have had different distribution arrangements.
Secondary trading remains outside the first stage
The initial Demat 2.0 phase is limited to institutional issuance. SEBI has planned secondary-market trading and eventual retail participation for later stages, to be conducted through its Regulatory Sandbox.
That sequencing is consequential for market liquidity. Primary issuance proves that bonds can be created, allocated and paid for through the new rails, but it does not show whether tokenized bonds can support active trading between holders. Secondary trading would require rules and systems for order matching, price transparency, ownership transfers, custody and market surveillance, alongside reliable connectivity between tokenized securities and payment wallets.
Retail access would introduce another layer of questions around wallet use, suitability, disclosures and the handling of small-value transactions. SEBI’s decision to begin with institutional issuance gives depositories, issuers and regulated participants an opportunity to test the system before extending it to a larger user base.
A test of infrastructure rather than bond economics
India’s first three tokenized offerings show the regulator is testing whether distributed ledgers and wholesale digital money can be integrated into a regulated debt-market workflow without changing the substance of the security. The immediate measure of progress will be whether the system consistently delivers same-day issuance proceeds, accurate ownership records and synchronized settlement across additional deals.
The next phases will determine whether those operational gains can be carried into a functioning secondary market. If they can, tokenized corporate bonds could give India’s debt market a faster settlement layer while preserving the established legal structure that issuers and institutional bondholders already use.
Explore how on-chain assets are reshaping traditional markets in 2026—read this deep dive on tokenized RWAs.
Disclaimer: The content on this page is provided for general informational purposes only and does not represent the views or financial advice of Toobit. We make no guarantees regarding the accuracy or completeness of this information and shall not be held liable for any errors, omissions, or outcomes resulting from its use. Investing in digital assets involves risk; users should independently evaluate their financial situation and the risks involved. For further details, please consult our Terms of Service and Risk Disclosure.
